Gold Price Forecast: The XAU/USD Battle with $2,330 Extends into an Important Week

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The price of gold remains near $2,325 during Monday’s Asian trading hours, maintaining Friday’s range. The price of gold fails to capitalize on the weakness of the U.S. dollar (USD) driven by the U.S. Personal Consumption Expenditure (PCE) inflation data, as buyers remain on the sidelines ahead of an important week.

Gold traders refrain from making new directional bets on the shiny metal ahead of this week’s speech by Federal Reserve (Fed) Chairman Jerome Powell at the European Central Bank (ECB) forum on Tuesday and the crucial Non-Farm Payrolls data on Friday.

These high-impact U.S. economic events are likely to help recalibrate market expectations for a possible Fed rate cut later this year, strongly impacting the value of the dollar and the price of gold.

Traders increased their bets on a Fed rate cut in September after Friday’s data showed that the annual core PCE price index, the Fed’s preferred inflation measure, rose 2.6% in May, slowing from a 2.8% increase in April.

Softer U.S. inflation data continued to weigh on the U.S. dollar, with pain exacerbated early on Monday, thanks to strong gains in the EUR/USD pair.

However, losses in the price of gold could be limited by stronger-than-expected Caixin manufacturing PMI data from China and renewed expectations of a Fed rate cut as early as September. Additionally, if the euro extends its early gains in European trading hours, it could accentuate the bearish trend of the U.S. dollar, providing the much-needed boost to the price of gold.

Technical Analysis of Gold Price: Daily Chart

The price of gold appears vulnerable as the 14-day Relative Strength Index (RSI) remains below the 50 level and the 21-day Simple Moving Average (SMA) at $2,328 acts as a difficult hurdle for buyers to overcome.

Acceptance above the 21-day SMA is critical on a daily close to resume the recovery from the monthly low of $2,287.

Higher up, the 50-day SMA at $2,338 will be challenged, followed by the two-week high of $2,369.

However, if sellers regain their composure, immediate support is seen at the $2,300 threshold, below which the support area of $2,290 will come into play. Around that level are last week’s low and the June low.

The last line of defense for gold buyers aligns with the May 3 low at $2,277.